Mortgage Loan Modifications Miss Mark

August 30, 2010

This article is included in these additional categories:

Analytics, Automated & MarTech | Brand Metrics | Data-driven | Financial Services | Real Estate

Mortgage servicers more often miss on delivering key service practices during the loan modification process than during the loan origination process, according to the J.D. Power and Associates 2010 U.S. Primary Mortgage Servicer Satisfaction Study.

The study measures customer satisfaction with five areas of the mortgage servicing experience: fees; billing and payment process; escrow account administration; website; and phone contact.

The study finds that, compared with the loan origination process, mortgage servicers more often fail to deliver on certain best practices during the loan modification process, including providing and meeting a time frame for approval; not asking for information more than once; explaining the entire process during application; and providing proactive status updates during the process.

For example, only 28 percent of customers were asked to provide information more than once during the mortgage origination process, compared with nearly 80 percent of customers during the loan modification process.

BB&T Best in Customer Satisfaction
BB&T (Branch Banking & Trust) ranks highest in customer satisfaction among primary mortgage servicers with a score of 795, and performs particularly well in fees and billing and payment process. SunTrust Mortgage follows with a score of 767, and U.S. Bank ranks third with 755.


Satisfaction Drives Loyalty
The study finds that higher customer satisfaction may lead to higher levels of loyalty and retention. Among customers in the prime credit segment, 34% of those who are highly satisfied (scores of 800 or higher) say they “definitely will” recommend their servicer, compared with just 6% among customers with lower satisfaction scores.

Similarly, 27% of highly satisfied prime credit customers say they “definitely will” select their servicer for a new home mortgage, while only 6% of less-satisfied customers say the same.

Dissatisfied Customers Make Frequent Contact
The study also finds that focusing on preventing problems during the servicing process, which may be accomplished by consistently performing key service practices, may not only improve customer experiences, but may also reduce the number of inbound customer contacts.

On average, customers with lower levels of satisfaction within the prime segment are nearly 3.5 times more likely to contact their servicers, compared with highly satisfied customers (satisfaction scores of 800 or higher, on a 1,000-point scale). Providing customer satisfaction can reduce inbound call volume by 13%.

Transparency, Statements Have Strong Positive Impact
Overall, J.D. Power & Associates research indicates the key service practices that have a particularly strong positive impact on customer satisfaction during mortgage servicing are:

  • Fee transparency: Communicating all fees in a concise way to ensure complete understanding and no surprises.
  • Informative account statements: Providing account statements to ensure that the most important information customers need is easily found.
  • Billing and payment by preferred method: Ensuring that customers are able to receive account statements and make payments through their preferred method.
  • Problem resolution: Ensuring that once a problem is identified, it is resolved quickly and efficiently.,

Home Buyers Happier than Sellers
Reflective of the real estate buyers’ market conditions in many regions in the US, satisfaction with real estate companies among home buyers has improved from 2009, while satisfaction among home sellers has declined, according to the J.D. Power and Associates 2010 Home Buyer/Seller Study.

Overall satisfaction among home buyers averages 803 on a 1,000-point scale in 2010, increasing by 12 points from 2009. This improvement is primarily driven by increased satisfaction with agents and salespersons.

In contrast to home buyer results, overall satisfaction among home sellers has declined by 40 points from 2009 and averages 742 in 2010. Among home sellers, satisfaction has decreased in all four factors, with the largest declines observed in marketing of the home and the variety of additional services offered.

About the Data: The 2010 US Primary Mortgage Servicer Satisfaction Study is based on responses from 4,516 homeowners regarding their experiences with their primary mortgage servicer and was fielded May through June 2010. J.D. Power and Associates is publisher of the enclosed chart, which is derived from the 2010 US Primary Mortgage Servicer Satisfaction Study.

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